from the free,-libre,-open dept

One of the most striking and important developments in the world of technology over the last two decades or so has been the rise of an alternative mode of production that is open, collaborative and global. This began in the world of software, with Richard Stallman's GNU project, but has now been extended to the realms of text, data, science and hardware, among others. The free sharing of information to form a kind of digital commons, which lies at the heart of these projects, has also been applied to business, albeit in the modified form of collaborative consumption -- things like Airbnb. These different manifestations of fundamentally similar ideas have sprung up in a largely uncoordinated way, but an interesting question is whether they could be drawn together into a unified approach, applied to a whole country, say.
That's what Ecuador's FLOK Society (original in Spanish) has been exploring. "FLOK" is derived from "free", "libre" and "open knowledge"; here's how David Bollier, an expert on the commons, describes the project:

The FLOK Society bills its mission as "designing a world for the commons."
The research project will focus on many interrelated themes, including open education; open innovation and science; "arts and meaning-making activities"; open design commons; distributed manufacturing; and sustainable agriculture; and open machining. The research will also explore enabling legal and institutional frameworks to support open productive capacities; new sorts of open technical infrastructures and systems for privacy, security, data ownership and digital rights; and ways to mutualize the physical infrastructures of collective life and promote collaborative consumption.

The legitimacy and logic of the project comes from the National Plan of Ecuador, which is centred around the concept of Good Living (Buen Vivir), which is a non-reductionist, non-exclusive material way to look at the economy and social life, inspired by the traditional values of the indigenous people of the Andes. The aim of FLOK is to add "Good Knowledge" as an enabler and facilitator of the good life.

That sounds inspirational, but how will it work in practice? In particular, how will those participating in the "Good Life" earn a living through this "Good Knowledge"? Bauwens explains:

Think of the core model of our economy as the Linux economy writ large, but one in which the enterprises are actually in the hands of the value creators themselves. Imagine this micro-economic model on the macro scale of a whole society. Civil society becomes a series of commonses with citizens as contributors; the shareholding market becomes an ethical stakeholder marketplace; and the state becomes a partner state, which "enables and empowers social production" through the communication of public services and public-commons partnerships.

Central to the success of Linux has been the adoption of the GNU General Public License, which allowed code to be shared widely but in a way that prevented the software commons being enclosed by companies taking and using that code without contributing back. Building on the GNU GPL's ideas, Bauwens and his team have drawn up a new license, tailored to the needs of the FLOK Society project and the people of Ecuador:

traditional communities have suffered from systematic biopiracy over the last few decades, with western scientists studying their botanical knowledge, extracting patentable scientific results from it, and then commercialising it in the West.

So fully shareable licenses like the GPL would keep the knowledge in a commons, but would still allow full commercialisation without material benefits flowing back to Ecuador. So what we are proposing is a discussion about a new type of licensing, which we call Commons-Based Reciprocity Licensing. This idea was first pioneered with the Peer Production License as conceived by Dmytri Kleiner.

Such licences would be designed for a particular usage, say biodiversity research in a series of traditional communities. It allows for free sharing non-commercially, commercial use by not-for-profit entities, and even caters for for-profit entities who contribute back. Importantly, it creates a frontier for for-profits who do not contribute back, and asks them to pay.

Although the license and FLOK Society are very consciously geared to the needs of the Ecuadorean nation that has sponsored them, the long-term goal is much more ambitious, and has at its heart ideas that have often been discussed here on Techdirt:

To work for a sustainable society and economy is absolutely crucial for the future of humanity, and while we respect the freedoms of people to engage in market dynamics for the allocation of rival goods, we cannot afford a system of infinite growth and scarcity engineering, which is what capitalism is.

In other words, today, we consider nature infinite and we believe that infinite resources should be made scarce in order to protect monopolistic players; tomorrow, we need to consider nature as a finite resource, and we should respect the abundance of nature and the human spirit.

Bauwens himself admits that FLOK Society is unlikely to transform an entire nation overnight, or even in the foreseeable future, but sees it as a crucially-important step towards that larger goal of global change:

the publication and the dialogue about the plan itself, and some concrete actions, legislative frameworks, and pilot projects, are the best we can hope for. What this will do is give real legitimacy to our approach and move the commons transition to the geo-political stage. Can we hope for more?

Personally, I believe that even if only 20% of our proposals are retained for action, I think we can consider it a relative success. This is the very first time such an even partial transition will have happened at the scale of the nation and, as I see it, it gives legitimacy to a whole new set of ideas about societal transition.

from the luddite-much? dept

Via Mathew Ingram, we learn of Alan Crosbie, the chair of Thomas Crosbie Holdings, a large Irish media conglomerate, which apparently believes all of this online claptrap could be on its way to destroying civil society -- which is apparently why we need to fund more newspapers. Or something. Honestly, the guy barely seems to be making any sense at all. He says that old media property likes newspapers, radio and television are important and should get funded because they "produce good information." But that new media "sometimes give credibility to news that maybe should not have credibility."

It would appear that Crosbie is, well, confusing the medium for the message. There are plenty of newspapers, radio and television news efforts that equally (if not more so) give credibility to news that should not have credibility. That, alone, has nothing to do with the medium in question. And yet, to Crosbie, new media could be the end of civil society:

There is a tsunami of information coming from new media, some of which has the "capacity to destroy civil society and cause unimaginable suffering."

Again, what does this have to do with new media vs. old media? The details come out later. Apparently, he just thinks that new media "steals" from old media, and thus old media can't afford to produce their good news any more:

"The fact is that, to generate good information carries a cost. It requires money. Unless you steal it like most new media companies do.

"And, if you bring that argument to its logical conclusion all you'll get on their news sites is a blank screen, because they eventually will have no one left to steal from."

We've been hearing these arguments for years, and yet, somehow, it seems like more news than ever before is being produced. And rather than "stealing" from old media, plenty of new media sources are adding value to those sources (value that the old media folks could provide if they just stopped blaming new media). Either way, comments like these are the sort of comments that should make any board of directors immediately question what out of touch luddite they have in charge of their media properties...

from the good-news dept

Almost exactly a year ago, we wrote about a draft version of a paper from Felix Oberholzer-Gee of Harvard and Koleman Strumpf of the University of Kansas concerning the impact of weaker copyright enforcement on society. It appears that they've now updated that paper and, as a whole bunch of you have been submitting, it's finally getting some press attention. The full paper is embedded below, and is quite similar to the draft we discussed last year, but since so many people seem unfamiliar with it, we thought it was worth reposting the whole thing, and some key points from it:

The paper looks at the overall market, rather than just the narrow market for direct sales of content, and finds, as we've been pointing out for years, that the increased ability to make, share, promote and distribute content hasn't hurt the content market at all. In fact, the opposite has happened:

Data on the supply of new works are consistent with our argument that file
sharing did not discourage authors and publishers. The publication of new books rose
by 66% over the 2002-2007 period. Since 2000, the annual release of new music albums
has more than doubled, and worldwide feature film production is up by more than 30%
since 2003. At the same time, empirical research in file sharing documents that consumer
welfare increased substantially due to the new technology.

...
While file sharing disrupted some traditional business models in
the creative industries, foremost in music, in our reading of the evidence there is little to
suggest that the new technology has discouraged artistic production. Weaker copyright
protection, it seems, has benefited society.

One of the key points that the paper makes is that many people have difficulty (especially beforehand) in recognizing whether certain products are substitutes or complements. If products substitute for others (i.e., downloads take away from sales), then a market can be harmed. However, if the products are actually complements (i.e., more content boosts other parts of the market), then a market can actually be helped. The detailed research that Oberholzer-Gee and Strumpf go through clearly shows (pretty unequivocally) that file sharing is a complementary good that has massively boosted many different ancillary markets, and created a fantastic consumer surplus without actually decreasing output. In fact, quite to the contrary, as noted above, creative output has risen at a dramatic pace. And, when you actually look at the overall market, you see that the actual spend on these markets is increasing, not decreasing:

The role of complements makes it necessary to adopt a broad view of markets
when considering the impact of file sharing on the creative industries. Unfortunately, the
popular press -- and a good number of policy experts -- often evaluate file sharing looking
at a single product market. Analyzing trends in CD sales, for example, they conclude that
piracy has wrecked havoc on the music business. This view confuses value creation and
value capture. Record companies may find it more difficult to profitably sell CDs, but
the broader industry is in a far better position. In fact, it is easy to make an argument that
the business has grown considerably. Figure 7 shows spending on CDs, concerts and
iPods. The decline in music sales -- they fell by 15% from 1997 to 2007 -- is the focus of
much discussion. However, adding in concerts alone shows the industry has grown by
5% over this period. If we also consider the sale of iPods as a revenue stream, the
industry is now 66% larger than in 1997.

The report also takes on the policy questions, and notes (as we have so many times) that too much of the policy debate is on how to help a particular industry, which is not what copyright is intended to do at all:

Copyright exists to
encourage innovation and the creation of new works; in other words to promote social
welfare. The question to ask is thus whether the new technology has undermined the
incentives to create, market, and distribute entertainment. Sales displacement is a
necessary but not a sufficient condition for harm to occur. We also need to know
whether income from complementary products offset the decline in income from
copyrighted works. And even if income fell, welfare may not suffer if artists do not
respond to weaker monetary incentives.

From there, the report notes evidence that the income from complementary products has, in fact, increased while at the same time pointing out that artistic output is clearly not suffering. While the report notes that further study on these issues is definitely required, it's amazing that so few people are talking about this. I've brought it up to both the USTR and the IP Enforcement Coordinator, and neither seems inclined to care. Both seem wholly focused on responding to the claims of industry lobbyists that they are being harmed. But industry players failing to react is not the same thing as actual societal harm, and -- as we have pointed out repeatedly -- the entire point of copyright law is supposed to be about benefiting society as a whole.

from the really,-now? dept

Rob Hyndman points us to two Canadian law professors, Michael Trebilcock and Edward Iacobucci, insisting that patents are "the mother of invention" in an article that mostly spends its time trying to defend the silly injunction (already put on hold) barring Microsoft from selling Word or Office, because it supposedly violates a patent, 5,787,449, on XML editing of a word processed document. There are all sorts of problems with the column, kicking off with Hyndman's question as to how law professors should be considered experts on innovation...

But, let's dig further into the details.

Patents are essential to the modern system of innovation. Once produced, information can be transmitted at zero cost. In the absence of patent protection, would-be inventors become vulnerable to competition that would drive the value of their discovery to zero, leaving them with no compensation for the costs of producing that information in the first place.

This is the usual story. And it sounds good. But there's no factual evidence to support it. That's because it ignores reality. Yes, information can be transmitted at zero cost, but that does not mean that implementation is assured, or that the market stands still. Besides, I'm curious as to the claim "vulnerable to competition," as if competition is a bad thing. Most people recognize that competition drives innovation -- and yet, these law professors are suggesting the exact opposite. That you need less competition to drive innovation.

Furthermore, they are wrong in claiming that in the absence of patent protection "the value of their discovery" is driven to "zero, leaving them with no compensation." They say this as if the compensation is for the idea, rather than the implementation. That is simply wrong. No one compensates you directly for an idea. If you have a good idea, you need to bring a product to market and sell it. If someone else copies that idea, you still have a large first mover advantage and you understand the market better. On top of that, you should be ahead of the curve in terms of improving on the concept for the next iteration. That's competition. It doesn't mean the value of the idea is zero or that there's no compensation. Claiming such makes no sense.

Again, beyond common sense, the historical evidence suggests that these law professors are simply wrong. Countries with no or weak patent protection have seen tremendous innovation over time. And it's because it's competition that's the mother of innovation, not a lack of competition. For well over two hundred years, economists have recognized that monopolies that remove competition are bad for innovation. These lawyers are insisting that the opposite is true, and present no proof.

Microsoft objects that the injunction ordered by the trial judge goes too far. (It has been put on hold until after the appeal, which is to begin Wednesday.) But injunctions are almost always ordered to prevent continuing infringement, and for good reason. To simply order money damages for future infringement would be to force i4i to license out its technology at a court-imposed price.

This is misleading. While it is true that in the past injunctions were the norm, since the US Supreme Court's MercExchange ruling more than three years ago, courts recognize that injunctions often do not make sense. The reason they don't make sense is because they require stopping the sale of an entire product (or lines of products) due to a single infringing feature. That makes no sense, and the courts have recognized this. I'm not sure why these law professors do not.

Just as there are good reasons not to compel citizens to sell or rent out their homes at prices set by judges, there are very good reasons in general to avoid compulsory licensing of intellectual property. Court determinations of the value of intellectual property are necessarily somewhat conjectural, yet damages awards require courts to act, in effect, as price regulators. By contrast, injunctions do not prevent a licensing deal from being done, but rather cede to the owner of the property the authority to set a price. Just as giving homeowners the right to decide whether to sell or rent out their houses does not destroy the housing market, in terrorem arguments about the death of Word under this injunction are without merit.

Again, this is quite misleading. It implies that an injunction leads to the natural market setting the price for licensing, but nothing could be further from the truth. If someone is pointing a gun at your head and negotiating over how much you have to pay to stay alive, that's not exactly a fair and open economic transaction that both parties enter into under their own free will. Claiming that this is somehow a more accurate market is pure folly.

Meanwhile, Microsoft has vociferously argued that despite the trial judge's careful vetting of the evidence, i4i did not establish at trial a firm basis for its damages claim for past infringement. This claim about the speculative nature of past damages sits uncomfortably with Microsoft's opposition to injunctions. Given the complexity of measuring supply and demand for a unique product, it must be true that there is some empirical uncertainty about the precise level of past damages. But if patents are to have value, this uncertainty is unavoidable: A damages award is the only available remedy for infringement that has already taken place.

Again, I have to admit confusion over these claims, which seem to have no basis in reality. It is not "the patent" that has value. It is the product. For sale in the market. And it's the consumer who values it. The fact is that many more people seemed to value a complete package of Microsoft Word. They were not buying it because of i4i's silly and questionable patent. They were buying it because Microsoft Word is a useful product. The difference in sales for Microsoft Word if it had not included XML editing would likely be negligible at best. There is no evidence of damages. If i4i and these lawyers are claiming that the "damages" are i4i's inability to sell its own product, again, that is difficult to square with reality. Competition happens all the time, and it's as good thing. i4i's inability to come up with a product or marketing plan that people wanted is its problem, not Microsoft's.

Also, the lawyers, in claiming that there was "careful vetting of the evidence," conveniently leave out that this was done in East Texas, which has a long history of vetting in favor of patent holders. Don't ask me, ask the bull that TiVo bought.

Protecting i4i's patent protects incentives to invent and the competitive process. In this case, the trial judge wisely offered such protection, while recognizing the court's own institutional limitations, by ordering damages for past infringement and injunctions going forward. While the decision was not a good one for Microsoft, it was clearly in the best interests of society.

Really? So, completely banning the sale of an entire office suite offering because one tiny, rarely used, feature might infringe on some random other company's products is "in the best interests of society"? That seems wholly without support. That would mean making every user of Microsoft's office suite suffer, for the benefit of a small 30 person company that developed a rather obvious concept. How is that possibly in the best interests of society?